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Testimony:
Before the Committee on Transportation and Infrastructure, House of
Representatives:
United States Government Accountability Office:
GAO:
For Release on Delivery:
Expected at 10:00 a.m. EDT:
Friday, July 31, 2009:
Recovery Act:
States' Use of Highway Infrastructure Funds and Compliance with the
Act's Requirements:
Statement of Katherine A. Siggerud, Managing Director:
Physical Infrastructure Issues:
GAO-09-926T:
GAO Highlights:
Highlights of GAO-09-926T, a testimony before the Committee on
Transportation and Infrastructure, House of Representatives.
Why GAO Did This Study:
The American Recovery and Reinvestment Act of 2009 (Recovery Act)
included more than $48 billion for the Department of Transportation’s
(DOT) investment in transportation infrastructure, including highways,
rail, and transit. This testimony—based on GAO report GAO-09-829,
issued on July 8, 2009 and updated with more recent data, in response
to a mandate under the Recovery Act—addresses (1) the uses of Recovery
Act transportation funding including the types of projects states have
funded, (2) the steps states have taken to meet the act’s requirements,
and (3) GAO’s other work on transportation funding under the Recovery
Act.
In GAO-09-829, GAO examined the use of Recovery Act funds by 16 states
and the District of Columbia (District), representing about 65 percent
of the U.S. population and two-thirds of the federal assistance
available through the act. GAO also obtained data from DOT on
obligations and reimbursements for the Recovery Act’s highway
infrastructure funds.
What GAO Found:
A substantial portion of Recovery Act highway funds have been
obligated, with most funded projects focusing on pavement improvements.
In March 2009, $26.7 billion was apportioned to 50 states and the
District for highway infrastructure and other eligible projects. As of
July 17, 2009, $16.8 billion of the apportioned funds had been
obligated for over 5,700 projects nationwide. About half of the funds
has been obligated for pavement improvements such as reconstructing or
rehabilitating roads; 17 percent has been obligated for pavement-
widening projects; and about 12 percent has been obligated for bridge
projects. Remaining funds were obligated for the construction of new
roads and safety projects, among other things.
States have generally complied with the act’s three major requirements
on the use of transportation funds: (1) Fifty percent of funds must be
obligated within 120 days of apportionment. All states have met this
requirement. (2) Priority for funding must be given to projects that
can be completed within 3 years and are located in economically
distressed areas, as defined by the Public Works and Economic
Development Act. Officials from almost all of the states included in
GAO’s review said they considered project readiness, including the 3-
year completion requirement, when making project selections. However,
due to the need to select projects and obligate funds quickly, many
states first selected projects based on other factors and only later
identified whether these projects fulfilled the economically distressed
area requirement. Additionally, some states identified economically
distressed areas using data or criteria not specified in the Public
Works or Recovery Act. In each of these cases, states told us that DOT’
s Federal Highway Administration (FHWA) approved the use of alternative
criteria but it is not clear under what authority it did so as FHWA did
not consult with or seek the approval of the Department of Commerce.
(3) State spending on transportation projects must be maintained at the
level the state had planned to spend as of the day the Recovery Act was
enacted. With one exception, the states have certified that they will
maintain their level of spending.
GAO will continue to monitor states’ use of Recovery Act funds for
transportation programs and their compliance with program rules. In the
next report, in September 2009, GAO plans to provide information on the
use of Recovery Act funds for transit programs and for highway
programs. Previous GAO work on the act has addressed other
transportation issues. For instance, GAO’s work on discretionary
transportation grants found that DOT followed key elements of federal
guidance in developing selection criteria for awarding these grants,
and GAO’s work on intercity rail funding found that although DOT’s
strategic plan for high-speed rail generally outlines how the act’s
funds may be invested for high-speed rail development, the plan does
not establish clear goals or a clear role for the federal government.
What GAO Recommends:
In GAO-09-829, GAO recommended that the Secretary of Transportation
develop clear guidance on identifying and giving priority to
economically distressed areas. DOT agreed with this recommendation and
is consulting with the Department of Commerce to develop additional
guidance on criteria to classify distressed areas for Recovery Act
funding.
View [hyperlink, http://www.gao.gov/products/GAO-09-926T] or key
components. For more information, contact Katherine A. Siggerud or A.
Nicole Clowers at (202) 512-2834.
[End of section]
Mr. Chairman and Members of the Committee:
I am pleased to be here to discuss our work examining selected states'
use of funds made available for highway infrastructure projects under
the American Recovery and Reinvestment Act of 2009 (Recovery Act).
[Footnote 1] Congress and the administration have fashioned a
significant response to what is generally considered to be the nation's
most serious economic crisis since the Great Depression. The Recovery
Act's combined spending and tax provisions are estimated to cost $787
billion, including more than $48 billion in spending by the Department
of Transportation (DOT) for investments in transportation
infrastructure such as highways, passenger rail, and transit. The
Recovery Act specifies several roles for GAO, including conducting
ongoing reviews of selected states' and localities' use of funds made
available under the act. We recently completed our second review, which
examined a core group of 16 states, the District of Columbia
(District), and selected localities.[Footnote 2]
My statement today is based largely on our recently completed work in
this area and addresses (1) the uses of Recovery Act transportation
funding including the types of projects states have funded, (2) the
steps states have taken to meet the act's requirements, and (3) GAO's
other work on transportation funding under the Recovery Act. The states
selected for our review contain about 65 percent of the U.S. population
and are estimated to receive collectively about two-thirds of the
intergovernmental federal assistance funds available through the
Recovery Act. We selected these states and the District on the basis of
federal outlay projections, percentage of the U.S. population
represented, unemployment rates and changes, and a mix of states'
poverty levels, geographic coverage, and representation of both urban
and rural areas. We also obtained data from DOT on obligations and
reimbursements for the Recovery Act's highway infrastructure funds. We
conducted performance audits for our second review from April 21, 2009,
to July 2, 2009, in accordance with generally accepted government
auditing standards. Those standards require that we plan and perform
the audit to obtain sufficient, appropriate evidence to provide a
reasonable basis for our findings and conclusions based on our audit
objectives. We believe that the evidence obtained provides a reasonable
basis for our findings and conclusions based on our audit objectives.
Background:
In March 2009, $26.7 billion of Recovery Act funding was apportioned to
all 50 states and the District for activities allowed under the Federal-
Aid Highway Surface Transportation Program, including restoration,
repair, and construction of highways, and for other eligible surface
transportation projects. The act requires that 30 percent of these
funds be suballocated for projects in metropolitan and other areas of
the state. Highway funds are apportioned to the states through federal-
aid highway program mechanisms, and states must follow the requirements
of the existing program.[Footnote 3] Under the Recovery Act, the
maximum federal fund share of highway infrastructure investment
projects is 100 percent, whereas the federal share under the existing
federal-aid highway program is generally 80 percent.
States Have Used a Substantial Portion of Highway Funds, with Funded
Projects Focusing on Pavement Improvements:
As of July 17, 2009, $16.8 billion of the apportioned funds had been
obligated[Footnote 4] for over 5,700 projects nationwide, including
$9.8 billion that had been obligated for over 2,900 projects in the 16
states and the District that are the focus of our review. About half of
Recovery Act highway obligations nationwide have been for pavement
improvements. Specifically, $8.2 billion is being used for projects
such as reconstructing or rehabilitating deteriorated roads. Many state
officials told us they selected a large percentage of resurfacing and
other pavement improvement projects because they did not require
extensive environmental clearances, were quick to design, could be
quickly obligated and bid, could employ people quickly, and could be
completed within 3 years. In addition, about $2.8 billion, or about 17
percent of Recovery Act funds nationally, has been obligated for
pavement-widening projects, and around 12 percent has been obligated
for the replacement and improvement of existing bridges, and the
construction of new bridges. Figure 1 shows obligations by the types of
road and bridge improvements being made.
Figure 1: Percentage of Highway Obligations Nationwide by Project
Improvement Type as of July 17, 2009:
[Refer to PDF for image: pie-chart]
Pavement improvement ($8.25 billion): 49%;
Pavement widening ($2.77 billion): 17%;
New road construction ($1.06 billion): 6%;
Bridge improvement ($903 million): 5%;
Bridge replacement ($736 million): 4%;
New bridge construction ($437 million): 3%;
Other ($2.62 billion): 16%.
Pavement projects total: (72 percent, $12.08 billion);
Bridge projects total (12 percent, $2.08 billion);
Other (16 percent, $2.62 billion).
Source: GAO analysis of FHWA data.
Note: "Other" category includes safety projects such as improving
safety at railroad grade crossings, transportation enhancement projects
such as pedestrian and bicycle facilities, engineering, and right-of-
way purchases.
[End of figure]
As of July 17, 2009, $401.4 million had been reimbursed nationwide by
the Federal Highway Administration (FHWA), including $140.8 million
that had been reimbursed for projects in the 16 states and the
District.[Footnote 5] DOT officials told us that although funding has
been obligated for more than 5,000 projects, it may be months before
contractors mobilize and begin work. States make payments to these
contractors for completed work and then can request reimbursement from
FHWA. Nevertheless, this is a notable increase in reimbursements since
we issued our report on July 8, 2009. At that time we reported that,
according to June 25 data, FHWA had reimbursed $233 million nationwide,
including $96.4 million that had been reimbursed to the 16 states and
the District. This is an increase of about 72 percent and 46 percent
respectively over a period of about three weeks, compared with
increases in obligations in the 6 percent range. We will continue to
monitor these trends in the weeks ahead.
According to state officials, because an increasing number of
contractors are looking for work, bids for Recovery Act contracts have
come in under estimates. State officials told us that bids for the
first Recovery Act contracts were ranging from around 5 percent to 30
percent below the estimated cost. Several state officials told us they
expect this trend to continue until the economy substantially improves
and contractors begin taking on enough other work.
States Have Generally Complied with Program Requirements:
Funds appropriated for highway infrastructure spending must be used as
required by the Recovery Act. States are required to do the following:
* Ensure that 50 percent of apportioned Recovery Act funds are
obligated within 120 days of apportionment (before June 30, 2009) and
that the remaining apportioned funds are obligated within 1 year. The
50 percent rule applied only to funds apportioned to the state and not
to the 30 percent of funds required by the Recovery Act to be
suballocated, primarily based on population, for metropolitan,
regional, and local use. The Secretary of Transportation is to withdraw
and redistribute to other states any amount that is not obligated
within these time frames.[Footnote 6]
* Give priority to projects that can be completed within 3 years and to
projects located in economically distressed areas, as defined by the
Public Works and Economic Development Act of 1965, as amended.[Footnote
7] According to this act, to qualify as an economically distressed
area, an area must meet one or more of three criteria, two of which
related to income and unemployment based on the most recent federal or
state data, and the third of which is based on a Department of Commerce
determination of special need.
* Certify that the state will maintain the level of spending for the
types of transportation projects funded by the Recovery Act that it
planned to spend the day the Recovery Act was enacted. As part of this
certification, the governor of each state is required to identify the
amount of funds the state plans to expend from state sources from
February 17, 2009, through September 30, 2010.[Footnote 8]
All states have met the first Recovery Act requirement that 50 percent
of their apportioned funds are obligated within 120 days. Of the $18.7
billion nationally that is subject to this provision, 69 percent was
obligated as of June 25, 2009. The percentage of funds obligated
nationwide and in each of the states included in our review is shown in
figure 2.
Figure 2: Percentage of Recovery Act Highway Funds Obligated as of June
25, 2009:
[Refer to PDF for image: vertical bar graph]
Level states were required to reach before June 30, 2009: 50%.
Nationwide:
Highway funds obligated: 69.5%.
State: District of Columbia;
Highway funds obligated: 95.5%.
State: Florida;
Highway funds obligated: 93.3%.
State: Illinois;
Highway funds obligated: 91.3%.
State: Iowa;
Highway funds obligated: 89.3%.
State: Mississippi;
Highway funds obligated: 86.9%.
State: New Jersey;
Highway funds obligated: 83%.
State: Colorado;
Highway funds obligated: 74.5%.
State: Arizona;
Highway funds obligated: 71.4%.
State: Pennsylvania;
Highway funds obligated: 66.9%.
State: California;
Highway funds obligated: 66.1%.
State: New York;
Highway funds obligated: 62.6%.
State: Michigan;
Highway funds obligated: 62.3%.
State: North Carolina;
Highway funds obligated: 61%.
State: Texas;
Highway funds obligated: 61%.
State: Massachusetts;
Highway funds obligated: 59.1%.
State: Georgia;
Highway funds obligated: 58.7%.
State: Ohio;
Highway funds obligated: 51.7%.
Source: GAO analysis of Federal Highway Administration data.
Note: This figure does not include obligations that are not subject to
the 120-day redistribution requirement (including funds suballocated to
localities) and obligations associated with apportioned funds that were
transferred from FHWA to the Federal Transit Administration (FTA) for
transit projects. Generally, FHWA has authority pursuant to 23 U.S.C. §
104(k)(1) to transfer funds made available for transit projects to FTA.
[End of figure]
The second Recovery Act requirement is to give priority to projects
that can be completed within 3 years and to projects located in
economically distressed areas. While officials from almost all of the
states said that they considered project readiness, including the 3-
year completion requirement, when making project selections, there was
substantial variation in the extent to which states prioritized
projects in economically distressed areas and how they identified these
areas.
Due to the need to select projects and obligate funds quickly, many
states first prioritized projects based on other factors and only later
identified whether these projects fulfilled the requirement to give
priority to projects in economically distressed areas. According to the
American Association of State Highway and Transportation Officials, in
December 2008, states had already identified more than 5,000 "ready-to-
go" projects as possible selections for federal stimulus funding, 2
months prior to enactment of the Recovery Act. Officials from several
states also told us they had selected projects prior to the enactment
of the Recovery Act and that they only gave consideration to
economically distressed areas after they received guidance from DOT.
States also based project selection on other priorities, such as
geographic distribution, the potential for job creation or other
economic benefits, and state planning criteria or funding formulas.
[Footnote 9]
DOT and FHWA have yet to provide clear guidance regarding how states
are to implement the requirement that priority be given to economically
distressed areas. In February 2009, FHWA published replies to questions
from state transportation departments on its Recovery Act Web site
stating that because states have the authority to prioritize and select
federal-aid projects, it did not intend to develop or prescribe a
uniform procedure for applying the Recovery Act's priority rules.
Nonetheless, FHWA provided a tool to help states identify whether
projects were located in economically distressed areas. Further, in
March 2009, FHWA provided guidance to its division offices stating that
FHWA would support the use of "whatever current, defensible, and
reliable information is available to make the case that [a state] has
made a good faith effort to consider economically distressed areas" and
directed its division offices to take appropriate action to ensure that
the states gave adequate consideration to economically distressed
areas.
We also found some instances of states developing their own eligibility
requirements for economically distressed areas using data or criteria
not specified in the Public Works and Economic Development Act.
According to the act, to qualify for this designation, an area
generally must (1) have a per capita income of 80 percent or less of
the national average or (2) have an unemployment rate that is, for the
most recent 24-month period for which data are available, at least 1
percent greater than the national average unemployment rate. For areas
that do not meet one of these two criteria, the Secretary of Commerce
has the authority to determine that an area has experienced or is about
to experience a special need arising from actual or threatened severe
unemployment or economic adjustment problems resulting from severe
short-term or long-term changes in economic conditions.[Footnote 10] In
each of the cases we identified, the states informed us that FHWA
approved the state's use of alternative criteria. However, FHWA did not
consult with or seek the approval of the Department of Commerce, and it
is not clear under what authority FHWA approved these criteria. For
example:
* Arizona based the identification of economically distressed areas on
home foreclosure rates and disadvantaged business enterprises--data not
specified in the Public Works Act. Arizona officials said they used
alternative criteria because the initial determination of economic
distress based on the act's criteria excluded three of Arizona's
largest and most populous counties, which also contain substantial
areas that, according to state officials, are clearly economically
distressed and include all or substantial portions of major Indian
reservations and many towns and cities hit especially hard by the
economic downturn. The state of Arizona, in consultation with FHWA,
developed additional criteria that resulted in these three counties
being classified as economically distressed.
* Illinois based the classification of economically distressed areas on
increases in the number of unemployed persons and the unemployment
rate,[Footnote 11] whereas the act bases this determination on how a
county's unemployment rate compares with the national average
unemployment rate. According to FHWA, Illinois opted to explore other
means of measuring recent economic distress because the initial
determination of economic distress based on the act's criteria was
based on data not as current as information available within the state
and did not appear to accurately reflect the recent economic downturn
in the state. Using the criteria established by the Public Works Act,
30 of the 102 counties in Illinois were identified as not economically
distressed. Illinois's use of alternative criteria resulted in 21
counties being identified as economically distressed areas that had not
been so classified following the act's criteria.[Footnote 12]
* California based its economically distressed area determinations on
the January 2009 monthly unemployment rates developed by the California
Employment Development Department. While the use of state data is
allowed under the act, the data must cover a 24-month period.
California officials stated that county-level unemployment data from
December 2006 through November 2008 were not sufficiently
representative of the current unemployment situation in California.
Our July 2009 report recommended that the Secretary of Transportation
develop (1) clear guidance on identifying and giving priority to
economically distressed areas that is in accordance with the
requirements of the Recovery Act and the Public Works and Economic
Development Act of 1965, as amended, and (2) more consistent procedures
for FHWA to use in reviewing and approving states' criteria. In its
response to this recommendation, DOT said that it has already provided
clear and consistent guidance to assist states and localities in
identifying economically distressed areas and prioritizing projects in
these areas, and that it has also conducted extensive outreach with
state and local governments. However, we believe DOT's existing
guidance is insufficient because, while it emphasizes the importance of
giving priority to these areas, it does not define what giving priority
means, and thus does not ensure that the act's priority provisions will
be consistently applied. DOT also stated that it is consulting with the
Department of Commerce to develop additional guidance on criteria that
may be used to classify areas as economically distressed for the
purpose of Recovery Act funding. We will review the additional guidance
when it becomes available and plan to continue to monitor this issue in
the weeks ahead for our future reports.
Finally, the states are required to certify that they will maintain the
level of state effort for programs covered by the Recovery Act. With
one exception, the states have completed these certifications, but they
face challenges. Maintaining a state's level of effort can be
particularly important in the highway program. We have found that the
preponderance of evidence suggests that increasing federal highway
funds influences states and localities to substitute federal funds for
funds they otherwise would have spent on highways.[Footnote 13] As we
previously reported, substitution makes it difficult to target an
economic stimulus package so that it results in a dollar-for-dollar
increase in infrastructure investment.[Footnote 14]
Most states revised the initial certifications they submitted to DOT.
As we reported in April, many states submitted explanatory
certifications--such as stating that the certification was based on the
"best information available at the time"--or conditional
certifications, meaning that the certification was subject to
conditions or assumptions, future legislative action, future revenues,
or other conditions.[Footnote 15] The legal effect of such
qualifications was being examined by DOT when we completed our review.
On April 22, 2009, the Secretary of Transportation sent a letter to
each of the nation's governors and provided additional guidance,
including that conditional and explanatory certifications were not
permitted, and gave states the option of amending their certifications
by May 22. Each of the 16 states and District selected for our review
resubmitted their certifications. According to DOT officials, the
department has concluded that the form of each certification is
consistent with the additional guidance, with the exception of Texas.
Texas submitted a revised certification on July 9, 2009. According to
DOT officials, as of July 28, 2009, the status of Texas' revised
certification remained unresolved. For the remaining states, while DOT
has concluded that the form of the revised certifications is consistent
with the additional guidance, it is currently evaluating whether the
states' method of calculating the amounts they planned to expend for
the covered programs is in compliance with DOT guidance.
States face drastic fiscal challenges, and most states are estimating
that their fiscal year 2009 and 2010 revenue collections will be well
below estimates. In the face of these challenges, some states told us
that meeting the maintenance-of-effort requirements over time poses
significant challenges. For example, federal and state transportation
officials in Illinois told us that to meet its maintenance-of-effort
requirements in the face of lower-than-expected fuel tax receipts, the
state would have to use general fund or other revenues to cover any
shortfall in the level of effort stated in its certification.
Mississippi transportation officials are concerned about the
possibility of statewide, across-the-board spending cuts in 2010.
According to the Mississippi transportation department's budget
director, the agency will try to absorb any budget reductions in 2010
by reducing administrative expenses to maintain the state's level of
effort.
GAO Has Ongoing and Related Work on Transportation Programs Funded
under the Recovery Act:
We will continue to monitor states' and localities' use of Recovery Act
funds for transportation programs and their compliance with program
rules. In our next report, in September 2009, we plan to provide
information on action taken by states and DOT in response to our
recommendation on economically distressed areas and follow up on the
progress states and metropolitan areas have made in obligating Recovery
Act funds for highway infrastructure programs. We also plan to examine
the use of Recovery Act funds for the Federal Transit Administration's
Transit Capital Assistance program--the transit program receiving the
most recovery act funding--in selected states. We expect that
subsequent reports will include information on states' use of Recovery
Act funds for other transit programs, such as the Fixed Guideway
Modernization program.
In addition to the two reports we have issued to date, we have also
reported or testified on the following issues related to other
transportation programs receiving Recovery Act funding:
* Discretionary transportation infrastructure grants. We reported that
DOT followed key elements of federal guidance in developing selection
criteria for awarding grants under this $1.5 billion dollar
program.[Footnote 16] These key elements include communicating
important elements associated with funding opportunities and using
selection criteria that support a framework for merit-based spending
and follow transportation infrastructure investment principles.
* High-speed passenger rail projects. We examined the factors that can
lead to economically viable projects and whether the Federal Railroad
Administration's (FRA) strategic plan to use the $8 billion of Recovery
Act funds provided for high-speed and other intercity passenger rail
projects incorporates those factors.[Footnote 17] We found that factors
such as costs, ridership projections, and determination of public
benefits affect which projects are likely to be economically viable. We
also found that FRA's strategic plan for high-speed rail outlines, in
general terms, how the federal government may invest Recovery Act funds
for high-speed rail development but that it does not establish clear
goals or a clear role for the federal government in high-speed rail. We
are beginning follow-up work aimed at, among other things, identifying
how project sponsors and others have surmounted the challenges of
instituting new rail service and how FRA is positioned to develop,
implement, and oversee its new high-speed rail program. We hope to have
this work completed by next spring.
We will continue to monitor these and other areas in which the
committee might be interested.
Mr. Chairman, this concludes my prepared statement. I would be pleased
to respond to any questions that you or other Members of the Committee
might have.
GAO Contact and Staff Acknowledgments:
For further information regarding this statement, please contact
Katherine A. Siggerud at (202) 512-2834 or siggerudk@gao.gov, or A.
Nicole Clowers at (202) 512-2834 or clowersa@gao.gov. Contact points
for our Offices of Congressional Relations and Public Affairs may be
found on the last page of this statement. Individuals who made key
contributions to this statement are Steve Cohen, Heather Halliwell,
David Hooper, Bert Japikse, Hannah Laufe, Leslie Locke, and Crystal
Wesco.
[End of section]
Footnotes:
[1] Pub. L. No. 111-5, 123 Stat. 115 (Feb. 17, 2009).
[2] GAO, Recovery Act: States' and Localities' Current and Planned Uses
of Funds While Facing Fiscal Stresses [hyperlink,
http://www.gao.gov/products/GAO-09-829] (Washington, D.C.: July 8,
2009).
[3] These requirements include ensuring the project meets all
environmental requirements associated with the National Environmental
Policy Act (NEPA), paying a prevailing wage in accordance with federal
Davis-Bacon requirements, complying with goals to ensure disadvantaged
businesses are not discriminated against in the awarding of
construction contracts, and using American-made iron and steel in
accordance with the Buy America program.
[4] The U.S. Department of Transportation has interpreted the term
obligation of funds to mean the federal government's contractual
commitment to pay for the federal share of the project. This commitment
occurs at the time the federal government signs a project agreement.
[5] The Federal Aid Highway Program is not a "cash up-front" program.
No cash is actually disbursed until states incur costs. Projects are
approved and work is started, then the federal government makes
payments--also called reimbursements--to the states for costs as they
are incurred on projects. The amount of cash paid to the states
reflects only the federal share of the project's cost.
[6] Recovery Act, div. A, title XII, 123 Stat. 115, 206.
[7] Id.
[8] Recovery Act, div. A, title XII, § 1201.
[9] For example, according to officials in North Carolina, the state
used its statutory Equity Allocation Formula to determine how highway
infrastructure investment funds would be distributed. Similarly, in
Texas, state officials said they first selected highway preservation
projects by allocating a specific amount of funding to each of the
state's 25 districts, where projects were identified that addressed the
most pressing needs.
[10] 42 U.S.C. § 3161(a). Eligibility must be supported using the most
recent federal data available or, in the absence of recent federal
data, by the most recent data available through the government of the
state in which the area is located. Federal data that may be used
include data reported by the Bureau of Economic Analysis, the Bureau of
Labor Statistics, the Census Bureau, the Bureau of Indian Affairs, or
any other federal source determined by the Secretary of Commerce to be
appropriate (42 U.S.C. § 3161((c)).
[11] The state based its classification of economically distressed
areas on (1) whether the 2008 year-end unemployment rate was at or
above the statewide average, (2) whether the change in the unemployment
rate between 2007 and 2008 was at or above the statewide average, or
(3) whether the number of unemployed persons for 2008 had grown by 500
or more.
[12] Illinois's criteria resulted in 21 counties being classified as
economically distressed areas that were not so classified by FHWA and 8
counties not being classified as economically distressed areas that
were so classified by FHWA, for a net difference of 13 counties. The
map tool that FHWA developed to help states identify which projects are
located in economically distressed areas is based on the criteria in
the Public Works Act.
[13] In 2004, we estimated that during the 1983 through 2000 period,
states used roughly half of the increases in federal highway funds to
substitute for funding they would otherwise have spent from their own
resources and that the rate of substitution increased during the 1990s.
The federal-aid highway program creates the opportunity for
substitution because states typically spend substantially more than the
amount required to meet federal matching requirements. As a
consequence, when federal funding increases, states are able to reduce
their own highway spending and still obtain increased federal funds.
The federal share under the existing federal-aid highway program is
generally 80 percent and the matching requirement for states is usually
20 percent. In 2004, we reported that in 2002, states and localities
contributed 54 percent of the nation's capital investment in highways,
while the federal government contributed 46 percent (in 2001 dollars).
GAO, Federal-Aid Highways: Trends, Effect on State Spending, and
Options for Future Program Design, GAO-04-802 (Washington, D.C.: Aug.
31, 2004).
[14] GAO, Physical Infrastructure: Challenges and Investment Options
for the Nation's Infrastructure, [hyperlink,
http://www.gao.gov/products/GAO-08-763T] (Washington, D.C.: May 8,
2008).
[15] GAO, Recovery Act: As Initial Implementation Unfolds in States and
Localities, Continued Attention to Accountability Issues Is Essential,
[hyperlink, http://www.gao.gov/products/GAO-09-580] (Washington, D.C.:
April 23, 2009).
[16] GAO, Recovery Act: The Department of Transportation Followed Key
Federal Requirements in Developing Selection Criteria for Its
Supplemental Discretionary Grants Program, [hyperlink,
http://www.gao.gov/products/GAO-09-785R] (Washington, D.C.: June 30,
2009).
[17] GAO, High Speed Passenger Rail: Effectively Using Recovery Act
Funds for High Speed Rail Project, [hyperlink,
http://www.gao.gov/products/GAO-09-786T] (Washington, D.C.: June 23,
2009).
[End of section]
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